Favede testifies on severance tax proposal

March 27, 2013

WASHINGTON - Belmont County Commissioner Ginny Favede testified before the members of the House Ways and Means subcommittee recently, regarding the Administration's severance tax proposal within the budget bill. (HB 59) Favede spoke to the specific CCAO adopted position regarding the Administration's severance tax proposal within HB 59.

Favede beleives:

Favede acknowledged that Belmont County is well within the region undergoing the current oil and gas boom. And Belmont County welcomes the opportunities that this development brings to Belmont County in the way of employment and sales tax revenues. Favede acknowledged that some of these revenues may have kept Belmont County afloat following budget challenges in part from necessary cuts in local government funding in the past state budget.

Commissioner Favede noted that while oil and gas development in the Utica Shale provides many welcome opportunities, with development come unique challenges.

"We know that our infrastructure will be placed under undue stress from the movement of equipment, supplies, and water to drilling sites. We have witnessed increasing demands on our services, staff, and equipment at the Courthouse, particularly within the county recorder's office. We are beginning to see housing difficulties because local citizens are being priced out of rental properties. We fear this will lead to increasing expectations on our social services network. We expect increasing demands upon law enforcement as drilling increases. These are only the challenges that we can foresee."

Favede asked that the General Assembly consider a slight increase in the severance tax rate on oil and gas companies beyond what the Administration is proposing to a more appropriate rate, without discouraging the industry from locating in Ohio. Favede stated that she believed the Administration's own talking points note that even the current proposed rates are significantly below any of our competitors.

"If there is an increase in the severance tax, it should address local government funding, infrastructure needs, local economic development and negative impacts on local communities and the environment."

Favede also testified that revenue from increased severance taxes on oil and gas companies should be used minimally for income tax cuts. The additional revenue would go a long way toward restoring the deep cuts to schools and local governments that were made in the last state budget.

Favede asked the General Assembly to consider granting townships the authority to impose impact fees on wells to compensate for infrastructure, environmental, and other local impacts from shale resource development. Because of the Pennsylvania's impact fee on natural gas wells, which is distributed to local governments, one township was able to cut the local property millage rate in half.

By modestly increasing the severance rate, but maintaining a competitive edge, the General Assembly can assist those impacted counties whose services and infrastructure may be impacted by such welcome but challenging development.

"I am doing everything I possibly can to see that Belmont County has every opportunity to prosper from the oil and gas industry," Commissioner Favede stated.